The recently enacted American Rescue Plan Act of 2021 (ARP) provides temporary premium assistance under the COBRA to help Assistance Eligible Individuals (AEI) continue their health benefits. The premium assistance applies to periods of health coverage on or after April 1, 2021 through September 30, 2021. AEI are not required to pay their COBRA continuation coverage premiums. An employer or plan to whom COBRA premiums are payable is entitled to a tax credit for the amount of the premium assistance.
AEI are COBRA qualified beneficiaries who meet the following requirements during the period from April 1, 2021 through September 30, 2021:
- Eligible for COBRA continuation coverage by reason of a qualifying event that is a reduction in hours or involuntary termination of employment; and
- Elects COBRA continuation coverage.
An individual is not eligible for the premium assistance if he or she is eligible for other group health coverage, such as through a new employer’s plan or spouse’s plan, or through Medicare.
New Notice Requirements
Employers are required to notify qualified beneficiaries regarding the premium assistance and other information about their rights under the ARP, as follows:
- A general notice to all qualified beneficiaries who have a qualifying event that is a reduction in hours or an involuntary termination of employer from April 1, 2021 through September 30, 2021. This notice may be provided separately or with the COBRA election notice following a COBRA qualifying event.
- A notice of the extended COBRA election period to any AEI (or any individual who would be an AEI if COBRA continuation coverage election were in effect) who had a qualifying event before April 1, 2021. This additional election period does not extend the period of COBRA continuation coverage beyond the original maximum period, which is generally 18 months from the employee’s reduction in hours or involuntary termination. This means that this notice requirement does not include those individuals whose maximum COBRA continuation coverage period, if COBRA had been elected or not, would have ended before April 1, 2021. This notice must be provided within 60 days following April 1, 2021 (that is, by May 31, 2021).
- A notice of the expiration of the premium assistance explaining that the premium assistance for the individual will expire soon, the date of the expiration, and that the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or coverage under a group health plan. This notice must be provided 15 – 45 days before the individual’s premium assistance expires.
Here is the Department of Labor’s website link to these model notices: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy
For additional information on this or any related topic, please contact any of the KDDK labor and employment law professionals.
